In 2010, a simple boy from a humble background, named Vijay Shekhar Sharma created history by starting one of the biggest digital payments and financial service company in India- Paytm. Paytm is an acronym for ‘Pay Through Mobile’ under the parent company One97 Communications.
What started as a mobile recharge platform soon expanded to multiple services such as booking movie tickets, train and flight tickets, transferring money, metro smart card recharge, bill payments, online shopping, and many more. In 2017, the company launched Paytm Payments Bank after RBI granted it the license to do so. The aim was to bring financial inclusion in the country by empowering the unbanked and underbanked Indians.
The company brought digital revolutionization in India. Banking and making payments had never been this convenient before. With its catchy tagline “Paytm karo” it was on everyone’s tip of the tongue and the brand became synonymous with making payments.
In 2013, Paytm grew 350% when compared to its previous year. 2016 demonetisation surged digital payments and boosted its business. In FY 23 it reported a revenue of Rs. 7990 crore. By July 2023 its average monthly users rose to 9.3 crores. In FY 24 Q3, it surpassed 100 million monthly transacting users. In November 2021, the company went public with the largest IPO during that time, aiming to raise Rs. 18,300 crores. Every year Paytm was adding a new feather to its cap.
What went wrong with PayTM?
Earlier this year, RBI announced the closure of Paytm’s payment bank because of persistent non-compliance, supervisory and money laundering concerns. Turns out ‘India’s most sincere bank’ was not so sincere after all. It directed the bank to stop all banking payments and services from 29th Feb onwards and instructed users to either utilise or withdraw the funds in their PPBL. The deadline was then extended to 15th March, and RBI issued answers to some FAQs. RBI stated that FASTag issued by PPBL could no longer be recharged.
A report alleged the presence of numerous fraudulent or fake accounts. The company was found to be lenient on user verification. The report claimed that thousands of accounts were opened with a single identity document. The company also failed to follow RBI’s firm KYC norms
ED and RBI’s steps
According to Times Of India, within 10 days of the announcement, Paytm’s stocks lost their value by 55%. The Enforcement Directorate (ED) investigated more than 50 lakh accounts and wallets but suspected no violation under the Prevention Of Money Laundering (PMLA) and Foreign Exchange Management Act (FEMA).
There prevails a dark cloud of uncertainty over Paytm and the business is at a halt. Not confirmed, but Reliance has an eye on Paytm. In Feb 2024, the founder of Paytm resigned and on 9th April, PPBL’s CEO, Surinder Chawla resigned. Today the company and its employees have job insecurity. The company is far from profits but hopes to become PAT-positive by FY 25.
The RBI’s notice only banned Paytm’s Payment bank but the core app of Paytm is working as usual. You can use it to make payments, transfer money, pay bills and for other services available on the app. If you have an existing account in PPBL use, withdraw or transfer it to some other bank account but you can’t deposit any new funds.
Paytm has been the flag bearer of the FinTech Industry in India. It paved way for other emerging FinTech companies in India. With this all time low for Paytm, the only way is forward!